Tatarstan loses to Bashkiria in effectiveness of industrial policy

Federal authorities evaluated the industrial policy of Tatarstan, giving it and two other regions only from the 6th to the 8th place in the top 10 most effective industrial facilities in Russia

Tatarstan rounded out the top 10 of the pilot rating of regions on the effectiveness of industrial policy, prepared for the first time by the Ministry of Industry and Trade of Russia. Together with Chelyabinsk Oblast and Leningrad Oblast, Tatarstan has become the 6th, but in fact, turned out to be the 8th. According to the compilers, the republic received 61 points, 5,5 points behind the winner of the rating — Bashkortostan with its 66,5 points. The reason is that the degree of the fall of industrial production in the pandemic in Tatarstan turned out to be greater than in other regions of the country. As the State Council explained to Realnoe Vremya, these ratings “are of little value for understanding the objective picture in the economy” since the structures of regional economies are different. But an unpleasant aftertaste remains.

Ministry of Industry and Trade has presented the first 'industrial' rating of regions

Within the framework of the International Industrial Exhibition Innoprom 2021, the Ministry of Industry and Trade of Russia announced the results of the rating of the effectiveness of industrial policy in the regions for the past year. This is the first experience of the federal authorities in forming a comparative picture of the actions of local authorities to stimulate production in the regions. The final meeting of the rating committee was held with the participation of the heads of Bashkortostan, Buryatia, Kaluga Oblast, and the meeting was moderated by Deputy Minister of Industry and Trade of Russia Aleksey Besprozvannykh. In total, 68 regions of the country took part in the rating, and 14 regions got into the top 10.

Contrary to expectations, Tatarstan turned out to be in the last part of the rating of the Ministry of Industry and Trade of Russia. The republic shared the 6th place with St. Petersburg and Chelyabinsk Oblast. Each of these three regions scored 61 points. Bashkortostan has been recognised as the winner of the rating, which received 66,5 points. Kaluga Oblast is the second with 64 points, Tula Oblast — the third with 63,3 points. The three regions became the 4th again. These are Krasnodar, Moscow Oblast, and Nizhny Novgorod Oblast, which received 63 points each. Sverdlovsk Oblast (62,5 points), which is the 5th, lost half a point to them. Thus, the industrial policy in the republic got a “solid C”.

The pilot rating is based on the Ministry of Industry and Trade's own methodology, which takes into account 40 economic indicators. They are grouped into four blocks: the economic development of the region (includes five indicators); the interaction of the region with the Ministry of Industry and Trade of Russia and the Industrial Development Fund (16 indicators), the regulatory framework, regional state support measures and development institutions (11 indicators), business activity of the region, youth policy, industrial tourism (8 indicators).

“Kaluga Oblast managed not to reduce the pace of industrial production, for 5 months we gave an increase of 19%, this is significant," said the governor of the region, Vladislav Shapsha. Photo: vk.com/shapsha

“Weak” link: low industry index

Tatarstan received the least — 1,5 out of 3,5 points — just for weak measures of economic development. Here, Tatarstan is the 12th along with St. Petersburg and Stavropol Krai among 14 subjects of Russia. This turned out to be its most disastrous position, which “threw” the republic to the bottom of the rating.

In many respects, macroeconomic indicators were reflected here. Against the background of the COVID-19 pandemic, the level of GDP decline from region to region turned out to be different. For example, according to the industrial production index, one of the key indicators of economic development, Tatarstan sank by 3,6% (to 96,4% compared to the level of 2019), while Chelyabinsk Oblast held on to 99,1% (lost 0,9%), Kaluga Oblast's index was 99,2% compared to the level of 2019.

“Kaluga Oblast managed not to reduce the pace of industrial production, for 5 months we gave an increase of 19%, this is significant," said the governor of the region, Vladislav Shapsha.

The decline in industrial production in Tatarstan occurred for a number of reasons. The greatest damage was caused by the fall in oil production under the agreement with OPEC+, which was agreed by Russian Deputy Prime Minister Yury Borisov, while in Kazan.

“How should we evaluate this result? I can say that just recently we have held a meeting with all the federal districts — this fits into the framework of general statistics," he said at the annual board meeting of the Ministry of Industry and Trade of Tatarstan.

“The year was terribly difficult, it was possible to close everything for quarantine, we would have had an explanation for this — oil problems, border closures. We fell by 3,5 percent — this is a small figure," Tatarstan President Rustam Minnikhanov agreed, but he set the task to bring the index of industrial production to 105,2% this year. “This is not an easy task, but it is real. After the fall of last year, we have to ensure growth. There are all prerequisites for this.”

Contrary to expectations, Tatarstan turned out to be in the last part of the rating of the Ministry of Industry and Trade of Russia. Photo: vk.com/shapsha

“Strong” link: high lending index in the FRP

In the other rating blocks, the results are much better. Tatarstan is ranked 1st in terms of the volume of funds raised by the Federal Development Fund, which is the key indicator of the effectiveness of interaction between the authorities of the republic and the Ministry of Industry and Trade of the Russian Federation. Tatarstan enterprises have attracted 10,5 billion rubles of FRP loans over the past 5 years, Minister of Industry and Trade of the Republic of Tatarstan Albert Karimov said at the meeting. The funds were allocated for the implementation of 42 investment projects in the field of import substitution, he said. The investment activity of enterprises brought the maximum number of points to the treasury of Tatarstan — 26,5 points.

“Tatarstan is diversifying, trying to participate in all state programmes," Albert Karimov said at the meeting. “These are both existing programmes and cooperation with the Industrial Development Fund, which has financed 42 projects worth 10,5 billion rubles over the past 5 years. We also support initiatives that have received a new life — this is the 41 decree of the Government of the Russian Federation on cluster support.”

We should add that as part of this measure, the Yelabuga Battery Plant has applied for a subsidy of 300 million rubles to expand the production of batteries as part of import substitution. The total cost of the project is estimated from 700 million to 800 million rubles. Yelabuga's application will be considered by the commission at the end of this year, and if approved, the new line will start at the end of 2022.

Business activity a la Bashkir

The legislative and rule-making activities of the authorities earned quite high scores. For this, Tatarstan received 20 points. The situation is worse with the business activity of the region and youth policy. Here, the republic was awarded 13 points. Tula Oblast and Stavropol Krai earned the most in this direction — 16 points each for each subject.

What does the business activity of the region mean? The head of Bashkortostan, Radiy Khabirov, explained:

“The high results of the rating are a consequence of that we closely interact with the management of industrial enterprises on a systematic basis.”

According to him, permanent working groups have been created for cooperation with large companies — Rostec, UMMC, Bashneft, Gazprom, Roscosmos. “We are constantly in contact, we always know what is happening with them. We are ready to provide them with any assistance," he said. As a result, the industrial production index in Bashkortostan reached 101,5% in the first five months of 2021, he noted.

During the main strategic session of Innoprom, Mikhail Mishustin called on manufacturers to respond promptly to market changes and consumer preferences. Photo: minpromtorg.gov.ru

Ministry of Industry and Trade: this is not a competition of regions

However, the organisers of the rating emphasise that they do not consider it “as a competition”, but see it as a tool for “identifying the best regional practices for replication throughout the country”.

“This year we are testing a 'pilot' project of the efficiency rating," explained Minister of Industry and Trade of Russia Denis Manturov. “I am sure that in the future it will prove itself as another important tool not only for the development of regional industrial policy, but also for interregional cooperation, since we want to convey the best regional practices. The performance rating is not a competition, we do not consider it in this way. This is a guide to action, a road map of the regional minister of industry, especially if he has been appointed not so long ago.”

During the main strategic session of Innoprom, Mikhail Mishustin called on manufacturers to respond promptly to market changes and consumer preferences:

“Today, flexibility is becoming one of the key conditions for efficient production. It minimises risks and reduces damage," Mishustin said. “We are talking about a fundamentally new format for organising industrial capacities, which is based on the widespread use of digital technologies.”

He said that the government intends to approve the strategy of digital transformation of the industry in the near future. “Over the next 10 years, it is necessary to achieve a twofold increase in the efficiency of equipment, increase the number of high-tech jobs by one and a half times, reduce the cost of developing and bringing high-tech products to the market by half," the prime minister said.

Ratings as “white noise” from Moscow

Tatarstan experts are surprised by the sensational results.

“These ratings are of little value for understanding the objective picture as a whole, because the structures of regional economies are different," Marat Galeev, a member of the State Council Committee on Economy, Investment and Entrepreneurship of the Republic of Tatarstan, commented to Realnoe Vremya. “Strictly speaking, there are few purely market niches left in the Russian economy where industry operates. One way or another, many large industrial enterprises are focused either on foreign export markets or on public procurement. What is the point of comparing them? The only thing that brings them closer is the state defence procurement — here we can talk about some kind of comparability of economic development, we can compare regions with each other.”

Secondly, the restrictions related to the fulfillment of obligations under the OPEC+ agreement had a strong impact on the decline in Tatarstan's GDP in 2020. And this does not depend on the actions of the regional authorities and the companies themselves. Thirdly, the economic structures of Tatarstan, Chelyabinsk Oblast, and Leningrad Oblast are still different to compare them in this way," Galeev concluded.

Nevertheless, Tatarstan will draw certain conclusions about the low results in the rating of the Ministry of Industry and Trade of Russia. In light of this, the recent criticism of the president of Tatarstan to Minister of Industry and Trade of the Republic of Tatarstan Albert Karimov for disrupting the preparation for the main industry event — the Tatarstan Petrochemical Forum (TNF) looks reasonable. It is possible that it is caused by discontent that the republic has lost to Bashkiria in the effectiveness of industrial policy.

Luiza Ignatyeva
BashkortostanTatarstan